The man who let Bronfman down

He is considered one of the biggest stars in the Israeli business world in which few stars come from the business sector.

He brought to Israel, characterized by "outdated" capital markets and business sector, daring "American" thinking.

He thought big and bet big in a country where most major corporations avoided big leaps.

He made big telecommunications acquisitions at the peak of the capital markets' euphoria.

He financed the acquisitions with billions in bank loans that he got with the wave of a hand from banks that didn't doubt his company's repayment capability for even a moment.

He won backing from the Bronfman family his company's biggest shareholder. Charles Bronfman placed a substantial cut of his wealth in this man's hands.

And then the communications and Internet bubble burst, and his companies started to collapse. His company's shares were the exchange's biggest losers, and in 2001 the company made huge write-offs and posted the biggest losses in the history of Israel.

Suddenly investors remembered the huge debt the company accrued in the boom years and the markets started wondering about the possibility of bankruptcy. The banks stressed out and forced him to start selling off assets and rescheduling loans.

If you didn't recognize the man, then mentioning the Bronfman family left no room for doubt. This column is about Koor CEO Jonathan Kolber, the man who lost nearly half a billion dollars, for himself and for Charles Bronfman, on a huge, bad bet on ECI Telecom.

However, as surprising as this will appear to some there is another businessman who fits the same bill. That man is Jean-Marie Messier, CEO of French communications giant Vivendi Universal.

During Wall Street's boom years, Messier became one of the biggest stars of the French business sector. He took water utility Vivendi and transformed it, through a series of audacious acquisitions, into one of the biggest telecommunications and media comp-anies in the world.

His first deal was acquiring control of tlevision company Canal Plus, for which he paid €1.25 billion. The second deal was a stock swap with Seagram, owners of Universal Studios, that made Seagram owners Edgar and Charles Bronfman into Vivendi's biggest shareholders.

Grandiose acquisitions of companies all over the globe made Messier into a symbol of the "new France" he looked like the American dream in a country where the business sector worked on outdated codes. Messier took quickly to American tricks, becoming a favorite of analysts, investment bankers and journalists both in Europe and in the U.S.

And then the bubble burst and it became clear that Messier did all that buying at inflated prices and left the company with a huge amount of debt. The share price crashed 50% and the bankers who financed him got very worried. Capital markets started talking in the past two weeks about the chance, albeit the tiniest one, of bankruptcy.

Kolber ran the same route the past three years. Fortunately for him, he began the downhill trip a year earlier, as ECI, in which he had invested hundreds of millions of dollars, started to collapse long before the crisis hit Vivendi's communications activities.

A year ago, Kolber told a friend that one of the biggest problems in dealing with the crisis was Koors massive daily media coverage because the Israeli economy is small and reporters dont have anything to write about.

Kolber can take heart now: the three biggest financial newspapers in the world -- The Economist, Wall Street Journal and Financial Times -- have recently taken to frying Messier for breakfast, lunch and dinner. Apparently, the failed managers of high-flying corporate giants that have risen and fallen, are no less targeted in New York and London.

Kolber can also take heart in the fact that Israeli newspapers have overcome the temptation to use associations with his name to emphasize his failures, while both The Economist and Fortune have pointed out to readers the word Mess in the Vivendi CEO's name.

The similarities between Kolber and Messier are not unique to Koor. Anyone following the business failures of U.S. and European concerns and communications companies will discover disturbing similarities between the stories.

Anyone who thinks the fall of Israeli tycoons that invested in the cable television business is a special case related to Israeli regulations, will discover that almost all the U.S. and European investment companies that bought cable television business in the past three years lost and lost big. Vivendi, for instance, lost billions on Canal Plus, which is more or less in the same hot water as Tevel.

Israeli investors can take heart in the face that Israeli managers didn't make bigger mistakes than those of their U.S. and European counterparts they just imitated their counterparts from across the seas.

Kolber can take heart in that no call arose in the Koor board of directors for his ouster and Charles Bronfman keeps supporting him, as it was Bronfman's representative on the Vivendi board who suggested toppling Messier. Kolber will probably ride out 2002 in the CEO's chair, and the same cannot be said for Messier.

Israeli CEOs, who have taken a beating in the past year on the capital market and in the press, can take heart in that most are not going to have to give up their jobs, while in the U.S. deposed CEOs are hitting the streets at a rate of 80 a month.

So don't say that Israeli business culture blindly imitates America here is one area in which Israeli directors and managers show independence.